Platinum sector on alert as Mugabe threatens ‘absurd’ export freeze

Platinum mining firms in Zimbabwe are said to be on alert, following threats by Robert Mugabe that all exports of the metal will be halted.

Mugabe was speaking at a ZANU PF meeting over the weekend, where he accused platinum firms of ignoring a government ‘directive’ two years ago to set up a Zim based refinery.

“Let us close our doors immediately and say no raw platinum will go to South Africa. The former minister gave them two years and we must see them now arranging to build a refinery,” the state-run Herald newspaper quoted Mugabe as saying.

“If they have not started, after that warning, building a refinery then when the time comes for us to demand that all refining has to be done here, they should not blame us.”

While Zimbabwe has the second largest platinum reserves in the world, raw product is exported to South Africa for refining. With South African mining giants Anglo American Platinum and Impala Platinum leading the platinum mining industry in Zimbabwe, such threats to freeze exports could have serious consequences.

According to the Zimbabwe Chamber of Mines, the country produced 350,000 ounces of unrefined platinum in 2012, which is 150,000 ounces less than the total needed to justify the building of a refinery. The Chamber estimates that a refinery will cost more than $2 billion to build.

Economist John Robertson told SW Radio Africa that Mugabe’s threats are “absurd,” saying the building of a refinery was never a commitment, because it depends on the volume of platinum being mined.

“It may well have been that the volumes would have been higher at this stage, but for the demands of the indigenisation policy. When the government came through with the policy three years ago it nearly brought a halt to the Impala Platinum owned Zimplats operations. It also slowed down immensely the operations of Unki Mine owned by Anglo American.These companies became less capable of raising money to fund expansion plans while indigenisation was hanging over their heads,” Robertson explained.

Robertson also said that the threats to freeze the exports was an unrealistic and ‘absurd’ statement, because the money the mining firms receive from sending the platinum to South Africa covered their various costs, including wages.

“Any freeze would immediately put a stop to their revenue and would put an end to thousands of jobs,” Robertson warned.

He added that the threat would further discourage investment in Zimbabwe, while leaving current investors on alert.

“They’d be disturbed that the government is interfering to this extent and is displaying this level of incompetence and ignorance. The main message will go out to (potential investors) that this is not the place to come,” Robertson said.

SW Radio Africa’s correspondent Lionel Saungweme agreed that the threats, if carried out, would further discourage new investment in Zimbabwe. He said the statement not only poses a danger to diplomatic relations, but would also “kill off any optimism since the stolen election, after many promises made by ZANU PF.”

“The message coming through is that no matter what guarantees are given by this government, they are not worth anything. One would speculate that these are senile statements coming from a senile mind,” Saungweme said. – SW Radio Africa

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